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News of July 24, 2002

DaimlerChrysler: Significant Improvement in Second Quarter Earnings Despite Difficult Market Conditions

Implementation of corporate strategy on track

Group Operating Profit excluding one-time effects increases to €1.9 (Q2 2001: €0.7) billion; including one-time effects €1.7 (Q2 2001: €0.9) billion

Positive trend at Mercedes-Benz Passenger Cars & smart continues (Operating Profit: €0.8 billion)

Significant profitability improvement at Chrysler Group (Operating Profit excluding one-time effects: €0.8 billion) and Services (Operating Profit: €0.2 billion)

Operating Profit excluding one-time effects at Commercial Vehicles Division again positive at €32 million, Freightliner achieves breakeven already in the second quarter

Adjusted Net Income up 128% to €1.2 billion, Earnings per Share up from €0.53 to €1.21

Group Operating Profit excluding one-time effects in first half of 2002 increases to €3.0 (Q2 2001: €0.1) billion; including one-time effects to €4.8 (Q2 2001: €-2.8) billion

Full-year Operating Profit excluding one-time effects expected to be substantially more than three times the level of 2001 (€1.35 billion)

Stuttgart/Auburn Hills - In the second quarter of 2002, DaimlerChrysler continued the positive trend of the first quarter, despite the generally difficult market conditions. Operating Profit excluding one-time effects increased to €1.9 billion (Q2 2001: €0.7 billion). This was primarily due to the strong improvement in profitability at Chrysler Group. This good result is further evidence that DaimlerChrysler is on track with the implementation of its corporate strategy.

Including one-time effects, Operating Profit of €1.7 billion was 80% higher than in the second quarter of last year. The implementation of the Turnaround Plan at Chrysler Group necessitated additional restructuring expenditure of €374 million, as DaimlerChrysler had announced in February 2001. At the Commercial Vehicles Division there was a one-time charge of €39 million as a result of restructuring measures, particularly in Western Europe and Brazil. These restructuring measures also require manpower reductions. The sale of DaimlerChrysler's remaining 40% equity interest in TEMIC resulted in a one-time gain of €156 million.

Net Income excluding one-time effects rose to €1.2 billion (Q2 2001: €0.5 billion) and Earnings per Share improved to €1.21 (Q2 2001: €0.53). Including one-time effects, Net Income amounted to €1.1 billion (Q2 2001: €0.7 billion) and Earnings per Share reached €1.10 (Q2 2001: €0.73).

In the first half of 2002, Operating Profit rose from €-2.8 billion in H1 2001 to €4.8 billion, adjusted for one-time effects from €0.1 billion to €3.0 billion. Net Income increased from €-1.6 billion to €3.8 billion, adjusted for one-time effects from €0.2 billion to €1.7 billion. Earnings per Share rose to €3.75 (H1 2001: €-1.62), adjusted for one-time effects to €1.71 (H1 2001: €0.16).

1.3 million vehicles sold worldwide

At June 30, 2002, DaimlerChrysler employed 374,059 people worldwide (June 30, 2001: 382,558). The main reason for the decrease in the size of workforce were the increases in efficiency at Chrysler Group and Freightliner.

Despite the generally weak level of demand in many key sales markets, DaimlerChrysler sold 1.3 million vehicles worldwide in the second quarter of this year, thus matching the high figures in the second quarter of 2001.

DaimlerChrysler's Revenues decreased in the second quarter by 5% to €39.3 billion.

Divisional details for the second quarter of 2002

Positive trend at Mercedes-Benz Passenger Cars & smart continues

Despite difficult market conditions, Mercedes-Benz Passenger Cars & smart achieved Unit Sales of 329,000 vehicles in the second quarter, thus equaling the peak recorded in the second quarter of last year. Revenues rose by 5% to €13.1 billion, and Operating Profit excluding one-time effects increased by 2% to €845 million.

The sales trend for Mercedes-Benz cars continues to be better than that of the overall market. Thus Mercedes-Benz gained market share despite an unchanged negative market trend in Western Europe and the United States. A 5% decline in Unit Sales in Germany was offset by growth in Western Europe (excluding Germany) of 9%. Sales in the United States decreased slightly (-1%) reflecting the upcoming E-Class model changeover.

There were very positive sales developments for the SL roadster (8,900 units, +205%) and the M-Class (30,100 units, +6%). In addition, C-Class sales rose (106,500 units, +5%), reflecting success with its station wagon and sport coupι versions.

The company was able to achieve full production rates at the new E-Class within just three months, compared to fifteen months for the model's predecessor. As a result, more than 72,000 E-Class cars have been produced so far. Incoming orders are also very pleasing.

At smart, second quarter Unit Sales were once again slightly higher than the same period last year (34,000 units; +1%).

Significant profit improvement at Chrysler Group

Retail sales at the Chrysler Group increased by 1% to 771,100 vehicles in the second quarter. The increase was led mainly by improved US Sales of minivans (+6%), the Dodge Ram pickup (+19%), the Chrysler PT Cruiser (+23%) and the Jeep Liberty, which set a second quarter sales record of 38,800 vehicles. Market share in the United States through June rose to 13.5% from 13.0% for total year 2001.

Unit Sales (factory shipments) by Chrysler Group in the second quarter decreased slightly to 816,000 vehicles. Incoming orders remained strong. US dealer inventories of 505,700 units at the end of June were at targeted levels (June 30, 2001: 507,700). Due to lower Unit Sales and particularly due to the appreciation of the euro against the US dollar, second quarter Revenues declined by 10% (or -5% on a dollar basis) to €16.4 billion.

The positive earnings trend of the first quarter 2002, when Chrysler Group recorded an Operating Profit excluding one-time effects of €127 million, continued into the second. Excluding one-time effects, Chrysler Group achieved an Operating Profit of €788 million in the second quarter of 2002, compared to a loss of €148 million in the second quarter of the previous year. This significant profit improvement is due to the effects of the Turnaround Program.

Operating Profit excluding one-time effects at Commercial Vehicles Division with €32 million again positive

Unit Sales in the Commercial Vehicles Division increased by 1% to 129,100 vehicles. Revenues also rose by 1% to €7.4 billion. However, mainly as a result of difficult market conditions in some of the markets of Western Europe and South America, Operating Profit (excluding one-time effects) of €32 million was lower than the figure reported for the second quarter of last year.

The Freightliner/Sterling/Thomas Built Buses business unit has returned to profitability already in the second quarter 2002. This is a result of cost reductions being achieved earlier than were originally projected in the Turnaround Plan together with a significant increase in Unit Sales (+5% to 29,900 vehicles). The sales increase was caused by vehicle purchases brought forward in connection with the new emission regulations (EPA 2002) that are to take effect in the United States in October.

Unit Sales by the Mercedes-Benz Trucks business unit increased by 2% to 26,600 vehicles in the second quarter. Despite the difficult market environment, last year's figures were matched in Western Europe. In addition, Unit Sales in the markets of Eastern Europe were increased once more.

Unit Sales of Mercedes-Benz Vans increased by 3% to 64,600 vehicles.

Largely due to the market weakness in Western Europe, worldwide Unit Sales by the DaimlerChrysler Buses & Coaches business unit declined by 14% to 6,300 vehicles.

Services Division achieves a significant increase in Operating Profit

DaimlerChrysler Services' second quarter Revenues of €4.0 billion were not as high as the prior-year figure. This decrease was primarily due to lower new business in the United States and a shift from leasing to sales financing. However, the more important measure of Operating Profit improved from €101 million to €227 million.

With the acquisition of a full banking license, the DaimlerChrysler Bank has now added banking products to its traditional leasing and sales-financing activities.

The new product range focuses on areas of business that meet the growing demand for banking services from automobile customers. DaimlerChrysler intends to use these services also to enhance customer loyalty to its automotive brands. DaimlerChrysler expects the expanded product range to deliver positive contributions to earnings.

Other Activities

In the Other Activities segment, the MTU Aero Engines business unit, due to account settlements and the ongoing weakness of global demand in the market for aircraft engines, recorded a decline in Revenues to €472 million (-37%) in the second quarter 2002, as had been anticipated. Total incoming orders of €758 million were 5% higher than in the second quarter of last year.

EADS' results for the first quarter of 2002 confirm the forecasts made for full-year 2002. EADS will publish half-year results on July 25, 2002.

Mitsubishi Motors' Unit Sales in Japan for the months of April through June declined slightly to 73,800 vehicles as had been expected for this generally weak market. However, in the important US market the company again increased its car sales, reaching a figure of 83,300 units, and thus strengthening its competitive position. Mitsubishi Motors continues to make much faster progress than expected with cutting material costs and fixed costs and with workforce reductions. Improvements of 137 billion yen (€1.2 billion) were 37% better than the planned target. Mitsubishi Motors' contribution to DaimlerChrysler's earnings in the second quarter 2002 was positive.

Outlook for full-year 2002

The Mercedes-Benz Passenger Cars & smart Division assumes that in 2002 it will match last year's high level of Unit Sales, Revenues and Earnings.

Good progress with restructuring, high cost savings and efficiency improvements justify DaimlerChrysler's assumption that Chrysler Group should report a positive result in the second half of 2002, despite difficult market conditions, and should thus achieve a positive Operating Profit for the year as a whole.

The Commercial Vehicles Division also anticipates a positive result excluding one-time effects in full-year 2002, higher than the figure for 2001.

The Services Division expects its generally favorable business trend to continue in the second half of the year, and that Operating Profit for the full year will increase substantially.

DaimlerChrysler's equity investment in EADS and the MTU Aero Engines business unit should also deliver positive contributions to the Group's Operating Profit in the 2002 financial year.

Mitsubishi Motors assumes that it will improve its profitability in its current financial year, which ends on March 31, 2003. Its contribution to DaimlerChrysler Group Earnings should be positive and thus considerably exceed last year's level.

The DaimlerChrysler Group as a whole expects Revenues of €150 billion for full-year 2002 (2001: €152.9 billion).

DaimlerChrysler remains cautious as far as developments for the remainder of 2002 are concerned. To date DaimlerChrysler has made significant progress regarding the factors that can be influenced internally, and this should continue. That said, the signals that DaimlerChrysler is receiving from its main markets still show a rather growing uncertainty as far as political and economic developments are concerned. Against this background, the overall results of the first half of 2002 cannot just simply be transposed into the second half of the year. DaimlerChrysler recognizes, for instance, that the third quarter is traditionally weaker in the automotive industry. Nevertheless, DaimlerChrysler is lifting its outlook for the Group for 2002. So far the expectation was that Operating Profit excluding one-time effects would exceed twice the level of 2001 (€1.35 billion) by a significant amount. DaimlerChrysler now expects that Operating Profit excluding one-time effects will be substantially more than three times the level of 2001.

(July 18, 2002)

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